Colombian issuance restarts with Ecopetrol jumbo
Ecopetrol has restarted issuance in Colombia’s local bond market, raising hopes of more deals
Ecopetrol, on a fundraising spree to
finance an ambitious investment program, has reopened the
Colombian bond market with the largest domestic transaction in
The state-controlled oil producer
sold 900 billion pesos ($464 million) in bonds
Tuesday. The deal was split across four tranches, with
tenors ranging from five to 30 years.
Proceeds from the sale will help fund
Ecopetrol’s extensive capex program. The company
spent $31 billion on capex between 2008 and 2012, and plans to
invest $75 billion in the next seven years.
Ecopetrol, which is 88.5% owned by the
Colombian government, plans to fund three-quarters of that
capex program through retained profits. It plans to allocate
nearly $7 billion of equity capital and around $12 billion of
debt funding to capex between 2013 and 2020.
Already this year, the company has raised
$847 million from a syndicate of international lenders in a
guaranteed by the US Ex-Im bank, as well as 1.84 trillion
a loan from domestic banks.
More Colombian paper
Investors placed around 1.9 trillion of
orders for Tuesday’s bond deal, which is the first
sale in the local market since May. The bond issue is also the
largest in the Colombian market since Ecopetrol’s
last deal in 2010, which was 1 trillion pesos.
The deal may kick-start more issuance,
bankers say. Local market bond sales waned after Colombian bank
de Occidente sold a 253 billion peso transaction in
May. Since then, several borrowers have been waiting for a
chance to issue bonds after volatility increased when the US
Federal Reserve began discussing an end to its program of
Ecopetrol is also eying the opportunity to
tap international investors. It
starts a five-day non-deal roadshow next week, starting
meetings in Singapore on September 2. The company will also
visit investors in Hong Kong, Europe, Latin America and the
Ecopetrol has not sold international bonds
since its $1.5bn international debut in 2009.
Ecopetrol reported Ebitda of 15 trillion pesos
on an unconsolidated basis in the first half of 2012. That was
a 6.2% fall from the same period the previous year.